Life After Chapter 11 Bankruptcy?

Hang in there, Kodak. Bankruptcy doesn’t have to mean the end.

Eastman Kodak (NYSE:EKDKQ) surprised few by declaring bankruptcy last week. It was clear to many business insiders back in September that Kodak was headed to zero after a panicked move to tap its credit line. As those who have watched the corporate history of Kodak know, years of big debts and a lack of innovation have been weighing on the iconic photography company for quite some time.

So is bankruptcy the end of Kodak? Will the brand disappear forever?

Probably not. Chapter 11 is sometimes just another chapter in the long history of a company. Here are several big-name companies that have declared bankruptcy — and emerged successfully on the other side.

Major Airline Carriers

It’s impossible to pick just one airline brand that has declared Chapter 11. Major carriers have gotten bankruptcy filings down to a science in this era of expensive regulations, expensive fuel costs and expensive union contracts. Here’s a short list of the players:

In November of last year, AMR Corp., the parent of American Airlines, was the last of the “legacy carriers” to suffer bankruptcy reorganization. It has yet to emerge, obviously.

Continental Airlines slid in to bankruptcy first, in both 1983 and 1990, before a merger with United to form United Continental Holdings (NYSE:UAL) in 2010. United itself went bankrupt in 2002 and emerged in 2006.

Delta Air Lines (NYSE:DAL) filed for bankruptcy in 2005 and emerged in 2007.

US Airways (NYSE:LCC) went bankrupt in 2002, briefly emerged, and went bust again in 2004. It was married with America West in 2005 to make it healthy enough to muddle through.

Obviously, the airline business has seen a mess of bankruptcies. But the planes keep flying, and the companies keep operating. They may never be growth stocks or big cash cows for investors, but they haven’t disappeared.

General Motors

General Motors (NYSE:GM) was facing troubles before the financial crisis, and in early 2009 relied on a government bailout — as did fellow ailing automaker Chrysler. The total price tag of the automaker bailouts was $82 billion (and according to a recent report, taxpayers will lose about $14 billion on the “investment”).

But GM made a speedy exit from Chapter 11, emerging in July of 2010 and holding a $20 billion GM public offering in November 2010 – the largest IPO in history at the time.

Bankruptcy led to lots of changes at GM, from restructured union contracts to the end of the Pontiac and Saturn brands to the death of Mr. Goodwrench. But now, GM is soundly profitable with around $150 billion in annual revenue. So much for General Motors being junked after bankruptcy.

Sbarro

A mainstay of mall and airport food courts, Sbarro has about 1,000 cafeteria-style pizza and pasta restaurants in the U.S. and overseas. The late Gennaro Sbarro started the business in 1956, and his family sold it to a private equity firm in 2007. The company went under in 2011, however, filing for Chapter 11.

Sbarro’s challenges were apparently shared in the pizza “sector” in 2011. The nation’s No. 10 pizza shop, West-coast based Round Table pizza with over 500 locations, and Uno Chicago Grill also went belly up in the same year.

In November 2011, Sbarro was granted court approval to emerge from bankruptcy after slashing its debt by around 70%, and providing the company to $35 million in cash to grow.

Friendly’s

In October of 2011, Friendly’s announced that it was declaring bankruptcy and closing over 60 stores nationwide. But quick as a wink, the company emerged just a few weeks ago — on Jan. 9 — after selling operations and restructuring. Friendly’s blamed the sluggish economy and slowing consumer spending, but apparently a quick reshaping of the balance sheet and some cost-cutting was enough to change the company’s fortunes.

Friendly’s has a 76-year history of offering tasty desserts and diner food. But it also has gotten a bad rap with many consumers for the quality of its service. Check any online review site like Yelp and look for yourself. New management says it will address these concerns, but only time will tell.

It’s also worth noting, however, that Friendly’s is reliant on the success of its ice cream business far above any gains at its namesake restaurants. At the time of the bankruptcy, old ownership Friendly’s Restaurants Franchise LLC listed estimated assets and liabilities in the range of $10-$50 million, whereas another unit Friendly Ice Cream Corp listed liabilities and assets of $100-$500 million.

It’s no surprise then that Friendly’s has made retail sales of its branded products a priority now that it’s out from under Chapter 11.

Eddie Bauer

In the 1990s, you’d be hard pressed to find a more American brand than Eddie Bauer. It provided stylish and rugged outdoorwear in the vein of LL Bean, and even got the Bauer brand on the most iconic SUV of the era — the Ford Explorer. But just several years later, Eddie Bauer was out of style, and consumers were trading in four-wheel-drive gas-guzzlers for hybrids. Its parent company, Spiegel Catalog, sought bankruptcy protection in 2003.

After emerging in 2005, however, Eddie Bauer filed for Chapter 11 again in 2009. It was acquired at auction by Golden Gate Capital later that year.

Though not quite the pinnacle of style and outdoorsy toughness it once was, Eddie Bauer remains a respected apparel brand and a regular tenant at shopping centers and outlet malls. It employs some 10,000 people worldwide — and in case you’re curious, it’s running one heck of a 60%-off sale right now.

imagecredit:newcissa

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Jeff Reeves is editor of InvestorPlace.com, where this article first appeared and a regular contributor to the Huffington Post. Write him at jreeves@investorplace.com. Follow Jeff Reeves on Twitter: www.twitter.com/JeffReevesIP